Stephen Kelly is a former U.S. diplomat in Canada who teaches at Duke University's Sanford School of Public Policy.
Dear Canada,
I regret to inform you that President Barack Obama has just killed the Keystone XL pipeline. You have a right to be upset, if only because it took us seven years to make up our mind. But this decision was hardly unexpected, and it probably won't make much difference in the end.
Why? Because you have become our absolutely favourite source of imported oil. And that isn't going to change anytime soon.
So, while you are licking your wounds, consider the bigger picture. In 2008, when TransCanada Corp. first applied for a presidential permit to build an 800,000-barrel-a-day pipeline from Alberta to Texas, the United States was at the bottom of an energy pit. Imports accounted for more than 60 per cent of our total oil consumption, and a lot of it came from countries that hate us, such as Venezuela, or places where almost as much oil got stolen as got put into legitimate trade, such as Nigeria.
That oil wasn't cheap, either. In June, 2008, a barrel of oil cost $146 (U.S.), which meant we were sending billions of greenbacks overseas. In that environment, getting more oil from our stable, like-minded, next-door neighbour made perfect sense. After all, Canada was already our top oil provider, and 100 per cent of the 2.5 million barrels a day you sent us in 2008 came through pipelines, by far the safest and environmentally soundest way to move oil. Plus, given the low quality of your crude, you sold it to us at a discount.
The Obama administration cited these same facts in approving a similar Canadian pipeline, the Alberta Clipper, in August, 2009, when the U.S. State Department declared that it served the national interest because it would increase reliable oil supplies from a neighbour that isn't a member of the Organization of Petroleum Exporting Countries and is also our major trading partner. In October, 2010, Hillary Clinton, then the U.S. secretary of state, declared she was "inclined" in favour of Keystone XL.
But what a difference a few years can make. Keystone got bogged down in U.S. presidential politics in 2012, when the Republican candidate said he favoured it. Environmentalists discovered that it would cross an environmentally sensitive part of Nebraska, a state that was already home to 30,000 kilometres of hazardous liquid- and natural-gas pipelines that had somehow escaped notice. And, perhaps most important, domestic U.S. oil production had reversed a 40-year downward trend and started to surge.
By 2015, the United States had become the world's largest oil producer, our oil imports had fallen to less than one-third of our total consumption and the price of oil had shrunk two-thirds from its 2008 spike. Historic floods and wildfires were making climate change harder to deny, and Washington was under pressure to play the adult at the upcoming United Nations climate talks in Paris. Even Ms. Clinton, now a presidential candidate, has changed her mind.
But take heart. Keystone may have hit the rocks, but Canada's pre-eminence as our go-to petroleum provider has never been more solid. In August, 2015, Canada exported nearly four million barrels of oil a day to the United States, a 56-per-cent increase from 2008 and three times more than the next-highest country, Saudi Arabia. Your oil accounted for nearly 45 per cent of total U.S. crude imports. And it got here without Keystone XL because oil producers, seeing the writing on the wall, discovered that trains can carry as much oil as Keystone XL, without a presidential permit.
In short, sorry for taking so long to say no. Also, sorry for all those train derailments we'll probably see as more oil hits our crumbling railway infrastructure, and the greenhouse gases those locomotives will emit.
Since your new Prime Minister, Justin Trudeau, hasn't worn Keystone on his sleeve the way his predecessor, Stephen Harper, did, we're hoping you won't take all this personally.
Because we like your oil and we'll keep buying it as long as you'll send it to us – however you get it here.